Business Case – A living Document in Project Execution

A Business Case is a crucial Business Document in the context of the PMP exam, serves as a justification for a project, and defines its boundaries. It is a Living Document and is steadily referenced during project work. Reviewing and updating a business case may be essential based on discoveries as project executes and insights gained over time. These regular updates make it a Living Document. Before discussing the Living nature of a Business Case document, let’s explore what it is, how it is associated with Business Value and the Benefits Measurement Plan.

What is Business Case Document:

A Business Case is a crucial business document that justifies the initiation of a project and sets clear boundaries for its scope, addressing a specific problem or pursuing an opportunity within a business context.

A business case involves conducting a cost-benefit analysis to assess the financial implications, addressing the underlying business need, defining quality specifications, and considering schedule or cost constraints. In essence, the Business Case provides a comprehensive explanation of why the project is necessary, what benefits it aims to deliver, and how it aligns with the organization’s objectives. Additionally, the Business Case provides a concise overview of essential elements, including the problem statement, proposed solution, revenue streams, and cost structures, in accordance with the selected project life cycle. The Business Case effectively demonstrates the alignment between the project outcomes and the organization’s overarching business objectives. When the portfolio group accepts the business case, it usually results in the creation of a project charter. Project Charter formally authorizes the project and provides high-level guidance for its execution. For a more in-depth understanding of a project charter and what it contains, please refer following blog – Project Charter: A Critical Component of Project Management

The format of the Business Case document may be tailored to the suggested development approach and life cycle chosen for the project. An agile approach may focus on incremental benefits realization, while a predictive approach may aim to achieve benefits by the end of the project. In any case, deliverables are monitored throughout the project execution to ensure they are on track to enable the intended business outcome.

Exploring Business Value, Business Benefits, and Benefits Management Plan in the Context of Business Case

1. Business Value and Business Benefits: One of the key aspects of the Business Case is the identification of Business Value. These business values are the net quantifiable Business Benefits, both tangible (mostly financial) and intangible, that can be derived from the successful implementation of the projects.  Benefits realization is based on identified and declared business value.

So, Business Value can be diverse and can include financial gains, acquiring new customers, leveraging social benefits, gaining a competitive advantage by being the first in the market, achieving technological or process improvements, or ensuring compliance with standards and regulations. Most of these benefits are placed and linked in the following two categories:

• Financial/Tangible: Some of the expected financial/tangible benefits could be like Increase sales by 40%, easier customer reporting, etc. Tangible benefits can also be definite, like reducing five steps in the insurance claim approval process.
• Non-Tangible: Benefits that cannot be quantitatively measured and are defined in relativity/subjectivity scale, like improved company brand Image and increased customer satisfaction. The project can develop a scale to measure these benefits or use the existing organizational scale. Like the client satisfaction rating was five before the project initiation, and now after the deployment of the project, it should reach nine. The selected business stakeholders give the value of these scales.

To determine and measure these business values or benefits, stakeholders are engaged, particularly the portfolio group, who have a vested interest in the project’s success. The portfolio group consists of individuals responsible for overseeing a collection of projects or initiatives within the organization. By involving these stakeholders, the developing process of the Business Case explores their perceptions of business value and aligns the identified benefits with the Business Goals and Objectives. This ensures that the project is in line with the strategic direction of the organization.

For more details about what business is Value, identifying Business Values, examining and prioritizing Business Value, and evaluating delivery options to demonstrate value, please explore – Business Value in Project Management for PMP Exam

2. Benefits Management Plan: The Benefits Management Plan is used to effectively create, maximize, and sustain the project’s benefits throughout the Project lifecycle. Once the Business Case is approved, it paves the way to initiate the project and its funding. At this stage, it becomes crucial to develop a Benefits Management Plan. While some business benefits may be realized during the project’s execution, others may only be realized after the project is completed and handed over to the operational team. The Benefits Management Plan helps identify and prioritize the benefits to be realized during the project execution and those that will be achieved by the operational team once the project is completed. It serves as a roadmap for effectively managing and realizing the expected benefits of the project. So, in summary, Benefits Management Plan outlines how and when the benefits will be realized and measured. The Business Value is initially captured in the Business Case and subsequently monitored through a continuous Benefit Realization System.

The Business Case and Benefits Management Plan are considered Living Business Documents that are developed prior to project initiation and referred to continuously during project completion. They are distinct from project documents or components of the project management plan. A business case is never baselined; it may be essential to review and update a business case based on what is discovered as a project advances over time.

Exploring Business Case as a Living Document:

As a Project Manager, how frequently do you refer to the Business Case during the project duration? Have you actively participated in the benefits analysis of your projects? How do you measure the success of your projects?

As a business case is a living document, it ensures that the project remains aligned with the defined objectives and justifications. Active participation in benefits analysis is highly recommended for Project Managers, as it involves identifying and assessing the value of benefits that will be delivered incrementally or upon project completion based on the project life cycle. This allows for measuring the progress and impact of the project in terms of the anticipated benefits.

When it comes to measuring project success, it is no longer solely based on meeting the traditional Triple Constraints of Scope, Cost, and Schedule. While those aspects are important, the focus has shifted toward the realization of business benefits. Project success is now measured by the extent to which the identified business benefits are achieved. This emphasizes the need for a strong alignment between the project’s output and the expected business benefits. By tracking the delivery and value of benefits and comparing them to the business case, Project Managers can gauge the success of their projects and ensure that they are providing the intended value to the organization. So, the project Manager should be aware of how his/her project is contributing to the Business Benefit Roadmap/Strategy.

As the program or project progresses, the portfolio group may review and update the Business Case to incorporate new discoveries and insights related to the project’s implementation and outcomes. These discoveries can include insights into market conditions, customer needs, technological advancements, or changes in the business environment. By updating the Business Case, the portfolio group ensures that it remains aligned with the evolving nature of the program or project, taking into account any new information or insights that may impact its viability or strategic value. The Business Case document is never baselined; it is updated based on new insights and discoveries.

Now, Let’s look at what should be done during project execution to achieve benefit realization:

• Activities During Project Initiation: During the initiation, Project Manager works with the business stakeholders to validate if the benefits mentioned in the Business Case are realistic and can be realized within project constraints. The analysis of dependencies on other projects/programs is also necessary during validation. After the validation, the excerpts of these benefits are included in the Project Charter. If Project Manager receives an already developed Project Charter, Project Manager still needs to validate Business Case.
• Activities During Project Planning: Project planning should focus on maximizing potential benefits through a realistic project management plan. After the initiation, Benefits are planned within the project management plan based on prioritizing requirements that result in maximum business benefits. The stakeholder engagement plan is highly influenced by the way the project needs to realize the benefits. Your project plan should give information about how you are going to Monitor& Control the benefits and at what frequency these benefits will be monitored. You can also define the metrics to measure the realization of these benefits. For example, if you are doing partial delivery of a segment of a product in between, you can measure customer satisfaction to check if it is improved as expected.

In the case of Agile/Scrum development, a Sprint/Iteration Planning meeting is held to prioritize user stories or backlog items based on their potential business benefits. The team defines metrics to measure benefits realization and discusses how each item contributes to project objectives. This ensures a focused approach to maximizing business value throughout the iterative and incremental development process.

• Activities During Project Execution: The project manager and project team engage stakeholders in a way that supports the realization of benefits. When the benefits realization is critical for the success of the project, it will impact the way how the time and resources are invested in the project. During execution, the project team produces deliverables; these deliverables enable outcomes or business benefits that the project was undertaken to create. In the case of Agile, these deliverables can be released after the end of iteration and give an opportunity to asses Business value incrementally.
• Activities During Monitoring & Controlling: The Project Manager and team need to measure if the project is on track to deliver business benefits. They can measure benefits using metrics defined in project planning. During planning, project managers need to collaborate with stakeholders to establish appropriate outcome metrics for these benefits. Project Team first measure the project outputs or deliverables and see how it enables the business outcome. For predictive approaches, metrics such as CPI (Cost Performance Index), SPI (Schedule Performance Index), EAC (Estimate at Completion), and ETC (Estimate to Complete) can be used to measure the project output. You can explore details of EAC and ETC here – What is EAC & ETC and What are its Variants? In Agile/Scrum, metrics like the burn-down chart and velocity chart can be used for the effective development of deliverables. These output metrics can be utilized as input to evaluate benefits. For that, the team uses outcome metrics like Objectives and Key Results (OKRs), ROI (Return on Investment), Net Promoter Score (NPS), and Net Present Value (NPV). The Requirement Traceability Matrix is also an important tool to check if the developed deliverables trace back to the business benefits. The project team may also choose to do Exploratory Testing or DITL testing. Day-in-the-Life (DITL) Testing determines whether or not a product provides the functionality for a typical day of usage by a role that interacts with the solution. The project Manager should also proactively watch for any assumption that has changed and can impact the benefits realization plan if necessary, update the project plan and other project documents with appropriate approvals. As a result, the project manager may also have an updated business case. So, the project manager and team, along with the portfolio group, monitor the deliverables and sometimes delivered benefits and their value with the justification outlined in the Business Case, which may determine whether the project should continue or be cancelled. It is important for the project manager to continuously reference the business case and prioritize understanding and delivering the business benefits aligned with the project’s output.
• Activities During Project Closing: It is the time to measure and demonstrate project success with respect to the benefits realized in the project. All benefits mentioned in the project Business Case may not be realized immediately after the deployment of the product/services. You should know that after the deployment when the benefits are expected to realize fully. Based on that, evaluation activities are conducted, and a project closure report is created. In measuring these benefits, post-deployment surveys and focus groups can be carried out to solicit quantitative or qualitative feedback. In closing, you measure, evaluate, demonstrate, and report the benefits. Your closure report should mention which benefits are realized, dependencies on other projects in realizing pending benefits, and which benefits will be realized by line operations after project handover.

To summarize, the traditional approach of linking the success of the project to Triple Constraints needs a paradigm shift in the mindset of project managers, business analysts, and organizations. Projects Business Case should be a live document, referred to, and if necessary, updated throughout the project lifecycle. The Project Manager should be aware of the benefits to be realized in the project and be able to demonstrate the project’s success through the benefits realized. I hope this blog helped you to understand Business Case. If you have any queries regarding the use of Business Case as a living Document, post your questions in the comment box below

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